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All Journal Proceeding of The International Conference on Economics, Accounting, and Taxation
Sharmin Akter Moni
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Does Advertising Reduce Price Elasticity? Evidence from Retail Markets Md. Mokshud Ali; Mohammad Jobir Monjur; Rita Saha; Karisma Tabassum; Rumpa Chowdhury; Sharmin Akter Moni
Proceeding of the International Conference on Economics, Accounting, and Taxation Vol. 3 No. 1 (2026): Proceeding of the International Conference on Economics, Accounting, and Taxati
Publisher : Asosiasi Riset Ekonomi dan Akuntansi Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.61132/iceat.v3i1.242

Abstract

Advertising and price sensitivity are pivotal in retail competitiveness, as companies communicate to increase demand while protecting margins in markets characterised by high price transparency. This study investigates the impact of advertising on price elasticity in retail markets and examines the underlying mechanism. It addresses conflicting findings in previous research regarding whether advertising differentiates companies and reduces price sensitivity or enhances market information and price comparison. The study evaluates the effect of advertising intensity on retail price elasticity and examines whether brand attitude mediates its influence on consumer purchasing behaviour. Seven hypotheses were tested concerning the direct effects of advertising on brand attitude, price sensitivity, and purchase intention, as well as indirect effects through mediation. A quantitative approach was employed using retail panel data on prices, advertising exposure, promotions, and sales, complemented by consumer survey data on brand attitude, price sensitivity, and purchase intention. Analysis integrated panel regression, difference-in-differences, propensity score matching, hierarchical modelling, factor analysis, confirmatory factor analysis, and covariance-based structural equation modelling. Results indicate that advertising reduces price elasticity primarily through improved brand perception. Advertising strengthens brand preference, reduces price sensitivity, improves brand attitude, and increases purchase intention through direct and indirect effects. The findings contribute to advertising theory and provide practical implications for managers and policymakers regarding pricing authority and brand resilience.
Co-Authors Karisma Tabassum Md. Mokshud Ali Mohammad Jobir Monjur Rita Saha Rumpa Chowdhury